CONSOLIDATION OF FSS INDUSTRY WON'T COME SOON, INDUSTRY CEOs SAY
Feb. 28, 2003
Communications Daily
(c) Copyright 2003 Warren Communications News, Inc. All Rights Reserved.
Satellite industry CEOs said consolidation of fixed satellite services (FSS) market might be likely, but it wasn't expected in near future. CEOs, members of Global Industry Leaders Roundtable panel at Satellite 2003 Conference this week in Washington, represented Eutelsat, Intelsat, Loral Space & Communications, New Skies Satellites, PanAmSat, SES Global. CEOs also said they could help govt. with capacity needs. SES Global CEO Romain Bausch said satellite players operating in same segments were more likely to consolidate because services already matched: "If there is no good strategic fit, then there will be no consolidation." However, Intelsat CEO Conny Kullman said: "In terms of strategy, complementary capabilities are more important than overlap." He said that when considering mergers or acquisitions, companies look at ways to increase savings. Satellite business is "capital intensive," he said, and services that complement it would create less need for more money. Loral COO Eric Zahler, said consolidation would make sense only if end result would increase value for shareholder.
It's easier for companies of different sizes to agree to consolidate, Eutelsat CEO Giuliano Berretta said. Two big companies are more likely to clash on various issues, he said, and when they realize that clash can't be avoided, it may be too late. "It takes years [after consolidation] to get good results, and sometimes you don't have years," Berretta said. New Skies CEO Daniel Goldberg said too much attention was being given to speculation on consolidation in industry. Consolidation won't change markets that operators will confront and industry fundamentally won't experience drastic change simply because there are fewer players, he said.
Responding to questions from moderators, CEOs said they were more than willing to help govt. with need for capacity, but it was difficult because govt. usually didn't specify what it needed in advance. "The government will have to get its plans out and try to get out of the annual appropriations cycle," PanAmSat CEO Joseph Wright said: "They have to start looking at more long-term programming." He said that after 9/11, satellite communications were proved to be very reliable but operators couldn't plan ahead because they hadn't been apprized of overall plan. Kullman said trends in awards of govt. contracts indicated playing field was level for all operators. "I think that what you see is that they're buying when they get the right coverage at the right price," he said. Zahler said govt. actually was one of better customers to have, even though planning for govt. was difficult: "They don't do so well with long-term plans, but they do pay their bills on time. Since we know that it's very difficult to change a customer's habits, our strategy is to go to the customer, not to try to bring the customer to us." -- Jeanene Timberlake
Satellite 2003 Notebook...
One of main regulatory issues govt. spectrum users face is inability to use commercial spectrum temporarily, Defense Spectrum Office Deputy Dir. Stuart Timerman said at MilSat 2003 session at Satellite 2003 conference. He said that if govt. could use commercially allocated spectrum, condition of noninterference hindered situation further. "On a noninterference basis, we can't interfere with others but we have to accept all kinds of interference from them. If anyone has a complaint, we have to shut down operations immediately," Timerman said. Govt. is interested in working with FCC and NTIA to allow use of spectrum temporarily when nothing else is available, Timerman said. Navy SatCom Program Mgr. Michelle Bailey expressed concerns about capacity availability. She said commercial operators tended not to allow govt. entities to use "spare" satellites and excess capacity because there were others who could offer more money to use it. Because it sometimes is impossible to predict exactly when capacity is needed, Bailey said, ability to use excess capacity would be extremely useful.
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